Franchisors need to know that their franchisees are team players, and plan on paying their royalties. Franchisees need to know that their franchisors will be there for them no matter what happens with the knowledge, advice, and marketing prowess they need to succeed. The franchise relationship is paramount, without it, the system breaks down, cancer forms, and even if everything looks okay on the outside, out on the stage, there is trouble in paradise, albeit behind the scenes.
As troubles cascade franchisees will not refer new franchise buyers into the system. Further, if a franchisor mentions that they have a franchisee in a nearby territory for a new prospect of franchise buyer to come take a look, that angry franchisee could kill the sale. And it really doesn’t matter why the franchisee is angry, they might be angry because another franchisee is encroaching on their territory, or that they just got hit with a recent fine from a regulatory agency.
In fact, this has happened to me before, and it was upsetting because the communication had broken down, and I had no idea what was going on, but a disgruntled franchisee was not there for our team. Over the years i’ve talked to many franchisees that were upset with their franchisor, and they worked to undermine the franchise system, formed franchisee rights groups, and even kicked around the idea of filing a class-action lawsuit.
Obviously, any time there are lawyers and lawsuits involved, communication stops completely, and sometimes franchisees take sides, and the franchisor is reluctant to share information or assist the franchisees. Franchises work because the franchise relationship provides a win-win situation, and anytime the franchisee, or the franchisor isn’t working towards the common goal there will be problems. Each side of the game has to be fully committed to the franchise brand, and success in the marketplace.
As long as that happens everything is fine, but if a franchisor can’t trust his franchisees, or the franchisees no longer trust the franchisor that is the beginning of the end of a solid franchise system. The worst part about it is many franchisors have no clue as to if their franchisees are happy or not. Most franchise executives assume that all the franchisees are happy, but when the franchisees are surveyed by an independent source, all of a sudden the truth comes out, and often it’s not pretty.
If you are going to get into a franchising system or purchase a franchise, I advise that you visit some of the current franchisees and make sure they are happy with the franchisor and that that franchisor is there for them. Likewise, if you are going to join the system you must be fully committed to the brand-name and for the franchisors best interests along with your own. You should be totally on the same team. If you’re not interested in doing business that way, you should not buy a franchise all. Indeed I hope you will please consider all this and think on it.